No. of Manufacturing Plants in Honduras
7. Conclusions & Limitations
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7. Conclusions & Limitations
This thesis has investigated the effects automation will have in the manufacturing industry of Honduras through a mixed approach involving qualitative and quantitative research tools. The collection and further analysis of the primary and secondary data presented in Chapter 2 and 4 can help answer the research questions presented in Chapter 3 which will be discussed below.
Main Research Question: How has automation affected employment in the manufacturing industry of Honduras? – This research has found no direct negative impact on employment in the manufacturing industry of Honduras as a cause of introducing new technologies that automate processes. The employment trend in the manufacturing industry shows a positive trend and an increment of over 30,000 employees in the last two years alone. The average number of direct employees in manufacturing plants has increased from 357 in 2009 to 472 in 2018 while the number of manufacturing plants has increased from 299 to 339 in the same period. The foreign direct investment in the manufacturing industry also presents a positive trend, denoting an attractive investment environment for international companies to manufacture their products. The overall positive trend is due to two main reasons: 1. Low cost of human labor in the country that proves to be more cost efficient for companies than the acquisition, maintenance and operation of automated machines and 2. Government policies and programs that promote an attractive and beneficial prospect for foreign investors as long as they can provide stable employment for a big percentage of the lower skilled employees.
Sub-question 1: How will automation continue to shape the skills and abilities required in the manufacturing industry of Honduras? – As stated by many of the studies analyzed in the literature review, the difference in jobs that have a higher risk of being automated against those which have lower risk is directly related to the education levels of the employees performing those jobs. Those with higher education levels are in charge of jobs requiring higher-level skills, therefore, are at a lower risk of automated machines taking over their duties. Contrary to employees with lower education levels performing routine tasks which can easily be outperformed by machines that can ensure standard quality and greater outputs. Honduras manufacturing industry employees in their majority fall on the lower level education, and even though as I stated before the employment levels have substantially increased and have a positive trend, this will not be an eternal state. Employees need to be ready for a change in the structure
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of employment, when the cost of human labor in the country exceeds the cost of automated machines, companies will be looking towards the implementation of technologies that standardize quality, greatly increase production output and are more cost effective. It is of great importance that employees start gaining new knowledge and abilities other than those required for routine tasks. If automation displaces their current jobs, employees who have enhanced their education will surely find new opportunities much faster than those who did not.
Sub-question 2: What costs, benefits and opportunities do automation present to a developing economy such as Honduras? – The costs for the Honduran economy if companies in the manufacturing industry decided to fully automate their processes is huge, this implies a large portion of the 160,024 employees working in industrial parks as of December 2018 would be at high risk of losing their jobs. The social and economic repercussions this would have on direct employees and their dependents would result in unprecedented levels of unemployment and poverty in the region. On the other hand, if companies and government work together in the enhancing of education and skill levels of employees, the effects of automation as a disruptive labor phenomenon will not be as severe. These employees will not only be capable of higher-level jobs receiving higher wages, but they will also be ready to transition if the introduction of new technologies displaces their jobs creating a net positive effect in the economy as employees would be receiving higher incomes and companies will be generating higher levels of production.
A research hypothesis was presented in Chapter 3: “If automation has significantly affected employment within the manufacturing industry of Honduras, the lower skilled employees will have been more extensively impacted than higher skilled employees as a direct result of the introduction of technologies that automatize tasks and processes”. While the results of this study cannot fully test the stated hypothesis due to Honduras labor cost being cost efficient enough for manufacturing companies not to extensively automate their plants which is contrary to recorded results regarding the effects of automation in more developed economies which served as subject regions for the studies presented in the literature review. However, this research predicts the hypothesis above will be proven true once the human labor costs in the
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This research heavily recommends the establishment of a productivity center that will boost the enhancement of skills among the Honduran population. This special institution should be developed through a private-public cooperation and if done properly should somehow mimic the success the establishment of the China Productivity Center had for the country of Taiwan since 1955.
The extents of this research are limited by the personal responses gathered in the interview
“Automation & Employment in Honduras, a Technology Expert Opinions and Views” which served as primary source of insider information on the manufacturing industry of the country, investment in new technologies and employees perceptions. This research is also limited by the studies, journals, reports and books covered throughout the literature review which focus and gather data from mostly developed economies and do not consider a less advanced country’s struggles and own limitations.
To conclude, automation is and will continue being a disruptor for labor markets around the world. Some jobs will be displaced or changed in nature, but new jobs will also be created along the line creating a positive net effect on economies as it has happened since the first industrial revolution. It is fundamental for companies and governments to work together to promote education and the learning of higher-level skills in their employees and growing population.
The design and implementation of adequate policies in terms of education, employment and foreign investment will plant the seeds for future generations of Hondurans to have access to better education, employment and a higher quality of life.
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9. Appendix
Full Transcript of the Interview: Automation & Employment in Honduras, a Technology Expert Opinions and Views
The following interview serves as a source of primary data for the thesis: “Automation and its Effect on Employment in Honduras Manufacturing Industry” presented by the interviewer as graduation requisite for International Master of Business Administration (IMBA) at National Chengchi University (NCCU).
Date: May 04, 2019
Interviewer: Jose Alfredo Sosa
Interviewee Profile Name: Edgardo Pascall Age: 36
Gender: Male
Current Position: Innovation Department Manager Work Experience (Yrs.): 14 years
The open ended-questions below are designed to support a more effective analysis of automation and technification processes in the manufacturing industry of Honduras and its relationship with employment. Please answer as extensively or briefly as you see fit.
Q1. Can you please introduce your academic background and professional experience in the manufacturing industry?
I´m an industrial engineer. During my 14 years, I have been working as customer service, product development assistance, engineer assistance, project manager and now I am leading the innovation department. During this time, I have improved production lines and information systems.
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Q2. Do you think companies in the manufacturing industry of Honduras consider automation as a top priority in their policies and investment goals?
In the past, the garments and footwear industries have not seen automation as a top priority but time has changed and do to the global competition companies have changed their priorities. The clients are looking for how fast their products can be moved as they place the production order so they can compete and offer not only top products but also fast response time. Due to this, manufacturing companies have been looking for an automatic process that can increase the speed of work, reducing the lead-time so they can offer lower time spans the client is asking for.
Q3. What kind of technologies are most commonly implemented in industrial parks across the country? What are their purpose and relative cost?
Most of the investments in technology are directed in establishing capable ERP that can handle all the information that goes through in a manufacturing company. All this is to give the decision makers the tools they require so decisions can be taken in the lowest time possible. Their cost can go to a couple hundred to thousands of dollars. In addition, they invest in automatic machinery that let the employee work with two or more machines at the same time in order to increase overall productivity and output per employee.
Q4. Is there a way to evaluate the levels of automation within a manufacturing plant?
You can do it but you have to evaluate each process by its own and see the levels of interaction between human and machine. Then you can go and see how many total manual processes you have ongoing, how many semi-automated processes and how many fully automated processes. That can give an idea of the percentage of automatic processes a manufacturing plant has compare to the manual ones.
Q5. Considering current technologies and capacities: do you believe manufacturing plants in Honduras, which in their majority serve the textile industry, could be fully automated? If not, to what extent do you believe they could be?
The technology to fulfill this exists, so in theory, it could be done. However, the cost would be too high so many companies established in Honduras will see it as not
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Q6. In which ways do you believe automation can increase productivity in a manufacturing plant? Could it have counterproductive effects?
If not used correctly, it can have counterproductive effects. For example, a complex process that can be hard to understand may confuse the employee resulting in serious problems for the manufacturing process. During my time working, I have seen automatic machines that are arranged together so one employee is able to work with all of them, this increases productivity and output since the employee is simultaneously operating two machines.
Q7. Based on your experience, have you seen a relationship between the introduction of automatized processes and the increase or decrease of jobs in a manufacturing plant?
Yes, I have seen a relation. Most of the manufacturing plants I have worked with have gradually increased the number of employees they hire, however the new jobs created mostly required relatively higher skills than the traditional lower skilled assembly line ones.
Q8. Do you believe lower skilled level employees in manufacturing plants fear they might lose their jobs to the introduction of new technologies?
Yes, from my conversations with employees I can notice a fear of losing their job by the introduction of new technologies. The employees are curious as to what kind of technologies are implemented to see if it will affect their tasks directly or indirectly.
Q9. Can the implementation of new technologies reduce jobs? (For ex. Lower skilled employees dealing with basic assembling functions)
Yes, it can definitely reduce the amount of employees’ necessary for the basic assembling function, technology not just reduces the amount of human input required but it also standardizes quality in the manufacturing process.
Q10. If there is a reduction in jobs, which kind of employees will be affected the most?
What kind of skills will become less demanded?
Mostly the lower skilled employees will be the ones affected since their routine tasks are easier to be automated by machines.
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Q11. Can the implementation of new technologies create new jobs? (For ex. Higher skilled employees to deal with this new technology)
Yes, it will, new technologies require employees that are able to adapt to the changes and learn rapidly how to work with new machinery. Typically, higher skilled employees are needed for the new positions created by automation.
Q12. If there is the creation of new jobs, what type of skills and employees will best fit these new roles?
They will need to be able to adapt to changes and be willing to work with their new environment. In addition, they will need a high level of understanding of the quality and cognitive abilities required for the new operations to be successful. New employees will also need to rapidly differentiate if the new machines are working correctly.
Q13. Do you foresee an increase in companies investing in automation processes in the future?
Yes, I see an increase in companies investing in automation technologies in the next years. However, as long as human labor in Honduras proves to be more cost efficient for these large foreign conglomerates, they will continue to select the option of people over machines.